Rochester tax cap still popular six years later

ROCHESTER — As of July 1, the city of Rochester, with its 2014-15 municipal budget passed, began a new financial year, spending held within the tax cap limits once again.

Since 2008, the city’s tax rate has risen year after year, but those rises, in line with the city charter’s tax cap amendment, have stayed within the annual change in the national Consumer Price Index or CPI. In other words, property tax bills are not exceeding the rate of inflation as computed by the CPI.

This may not be immediately apparent by looking at the city’s tax rate. For example, Rochester’s tax rate in 2008 was $19.99 and in 2009, the year after the tax cap was approved by voters, it was $22.94. In that period, however, there was a massive, country-wide slump in property values, and, as Deputy Finance Director Roland Connors points out, the city’s valuation slid from $2.3 billion to $2.07 billion. This meant that property values all over Rochester declined by an average of around 10 percent in 12 months. Thus, in 2009, property taxpayers paid tax bills equivalent to a rate of around $20.64 in comparison to the 2008 rate— so their actual tax bills rose just a little over 3 percent.

In 2013, the total valuation of Rochester is actually a fraction less than in 2009, and so the current tax rate of $26.36 represents an annual average increase of about 3.5 percent.

The tax cap’s origins

One of the architects of the tax cap was Fred Leonard, who, in April of 2008, was alarmed at then City Manager John Scruton’s initial proposed budget increase of $3.99 for that year. (It was later modified by the City Council to a little over a dollar but this still represented an almost 6 percent hike.)

Leonard, in a recent interview with the Rochester Times, looked back at that period, and said that in the spring of 2008 he called up fellow activist Tom Kaczynski, and asked him if he’d help organize a group.

“Tom and I became co-chairs of the Rochester Concerned Taxpayers Association. We held the first meeting in Tom’s garage with about 50 to 60 people. (Former state senator) George Lovejoy spoke,” recalled Leonard.

The group met with Ed Naile of the Coalition of NH Taxpayers Association and tapped into his knowledge of tax and spend caps. They also contacted a right wing political organizer, Mike Biundo, who told them of a Rochester resident, Tom Hudson. Hudson already had the application needed to collect signatures for a tax cap — an application that had to be signed by five registered voters and given to the City Clerk.

“Tom Hudson didn’t know anybody, so he gave me the application,” said Leonard. The affidavit was duly signed by a number of people, including Leonard, Kaczynski and Cliff Newton.

To get the proposed city charter amendment onto the general election ballot in November of 2008, the organizers had to get 20 percent of the voters who cast ballots in the 2007 municipal election. This translated to 20 percent of 3,976, meaning 795 signatures of registered voters were needed on the petition.

“At that point, Cliff took the reins,” said Leonard, adding that someone in Concord or Manchester was paying Newton to collect signatures.

“I got a stipend for my expenses,” said Newton, asked about the payment by the Rochester Times, “but I don’t remember the group’s name (that made the payment.)”

Nor could he recall how much money he had received.

Leonard said that around 20 people were collecting signatures for the petition, and he, himself, gathered around 150.

“I would never have taken money. That he (Newton) got paid bothered me a little, but not enough,” said Leonard.

The petition drive, which was conducted mainly in May through July of 2008 was very successful.

Newton was quoted, on the steps of City Hall before the petitions were turned in to City Clerk Joe Gray, as saying, “Ladies and gentlemen, isn’t this a lovely sight — it’s 1,700 (signatures) and we’re still collecting them.”

In actuality, 1,742 names were collected — almost 1,000 more than were legally required.

The governing body — in this case the City Council — had to vote to put the tax cap amendment on the fall ballot, and having no choice, duly did so.

Before the vote, though, as Leonard recalls, Mayor John Larochelle allowed each councilor to make a public statement. An overwhelming majority of the council opposed the cap.

“In effect they were campaigning without allowing equal time,” said Leonard.

A couple of “for and against” debates were held prior to the November election.

One was held at the VFW, with Franklin Mayor Ken Merryfield speaking in favor of the cap, and Bob Mulcahy opposing it.

Leonard recalls the debate as being “very gentlemanly.”

The second debate was sponsored by the Chamber of Commerce, Leonard said, with Merryfield again speaking in favor and this time Dover-based economist Brian Gottlob was in opposition.

Leonard said that a vital provision, for him, in the charter amendment wording, was (and is) the council’s ability to override the tax cap with a 2/3 vote.

On election night, Leonard and Kaczynski were in a Dunkin’ Donuts when the results came in from across the city.

“When Tom and I got the first numbers, we couldn’t believe it. We were stunned how overwhelming it was. The amendment got more votes than Obama,” said Leonard.

When the dust had settled, there were 9,755 votes in favor of the tax cap and 4,232 opposed.

Tax cap impact

Newton, speaking recently, said the council no longer has to pay as much attention to the demands of pressure groups “because they can’t spend recklessly.”

He added that on reflection, he would like to see the tax cap tied to the rate of residents’ income increase.

“I would hate to see the tax rate go up if we get 6 percent super-inflation,” said Newton.

Leonard noted, “The tax cap has saved thousands of people thousands of dollars.”

Deputy Mayor Ray Varney said that it has been “difficult” formulating a budget under the confines of the tax cap.

“We would like to accelerate road paving. We spend about a quarter of what we should,” said Varney. He added that a lot of progress had been made with the unions in the last three years, especially with health care costs.

In his estimation though, were the tax cap issue to be back on the ballot, it would again be approved by a majority of the voters.

“We live with it,” he said, suggesting that if the tax cap calculations were based on averaging the CPI out over four of five years, it would lessen any fluctuations.

Mayor TJ Jean described the tax cap as “helpful” when framing the budget.

“It brings discussion every year, and makes it easier to handle the budget,” he said.

The mayor said he thought the school department has suffered more severely, as the costs of education were going up faster than the CPI.

The restrictions of the tax cap, however, have made formulating the Rochester School District budget, in particular, a yearly challenge.

School Board member Bob Watson noted that the school budget had never exceeded the cap, but at a cost.

“We have had to make personnel cuts each of the last five or six years. Eventually it catches up with you. This year we had to cut a bus run, and got feedback from a lot of parents, but it saved a teacher. We cut 11 positions this year, spread out across the district,” said Watson.

He said that health costs were increasing faster that the CPI, although negotiations with the school district’s unions had led to those groups taking on more.

“Special ed. costs have increased, and we have to meet them by federal mandate. This year we had to get a supplemental from the City Council when more students moved into the district,” said Watson, noting that school budgeting difficulties have been compounded by a drop in state aid in recent years.